Trace and Track

Trace and Track

Coffee is most likely to become anonymous near origin.

By Anne-Marie Hardie

Tracking a seed from farm to cup seems simple. But documenting every step from a single grower to processor and exporter, and then onto a roaster, retailer and consumer, is quite complicated. Now consider blends that mix coffee from hundreds of growers from multiple origins in differing ratios for recipes that vary by season.

With so many players and variables, it is no wonder that essential details from origin get lost in the shuffle. Traceability presents several challenges starting with the fact that approximately 80% of the world’s coffee is grown by small holders. Many struggle to make ends meet. Some are illiterate. Few know how to price their beans, let alone fully understand supply chain markup or what consumers pay, or the coffee’s final destination.

Trace and Track

“Most coffee becomes anonymous somewhere in the supply chain, the question is ‘Where does it happen?’ and the answer is that it often happens very early on,” said Daan DeVries, innovation and technology director at UTZ Certified. There is a huge informal economy within the coffee sector most of which is cash-based, he explains. This opacity makes it difficult to trace the journey of the bean right from the start. On a positive note, the expanding specialty coffee segment has increased interest in traceability. Specialty roasters actively seek beans from single origin, and often a single farm, to ensure a consistent, quality product. Health and safety and sustainability are also concerns eased by traceability.

In fact, companies that decide not to put transparent practices into place face an inherent risk.

“There is a defensive strategy to traceability,” said DeVries. “In many sectors, it is tied to food safety, for example in tea, there has been an increased concern with pesticides. Being able to trace the product back to its source, and the methods used in growing it, could alleviate these concerns,” he said.

Transparency depends on the ability to trace accurate information as it is relayed down the supply chain. Obtaining and communicating accurate details is challenging, particularly when the players rely on manual reporting.

“There are many different layers of transparency and risks associated with each layer,” said Peter Roberts, academic director, Transparent Trade Coffee (TTC). “Just having the information and putting it into the market is not enough, there needs to be the social structures in place to support the information,” he said.

The supply chain is particularly challenging, with so many hands touching the transaction, and potentially manipulating the information. This is why traceability software has proven helpful. “Given our experience with emerging economies, we have found that people are more trusting of the technology than the human factor,” said Allyson Quijano, director, partnerships and business development, bext360.

Recognizing this struggle, bext360 developed a cryptocurrency platform that immediately pays producers on delivery and fully documents transactions digitally on a platform that makes this information discoverable along the supply chain. This continuously growing list of records, called blocks, forms a blockchain that is far superior to existing, antiquated record-keeping based on bills of lading, according to Quijano. Farmers who bring their coffee to the bext360 collection center load their beans into a sorter that analyzes the quality of the coffee cherry. This information forms the first block. This data provides immediate feedback to farmers who can either accept or reject the price associated with that grade of coffee.

“Recently there’s been a lot of hope around the concept of blockchain technology,” said DeVries. “But these systems don’t emerge by themselves, there are a lot of things that need to be done for the system to work.”

Trace and Track

One of the goals for UTZ is to increase the digitization within the first mile so as to better understand the region where the coffee is sourced. Co-operatives and traders are incorporating digital systems for traceability for the benefit of roasters who may want to know the source country, region, cooperative, a washing station, and ideally the farmer as well. Al Whitehead, senior consultant at FarmSoft, says that when beans from multiple suppliers are mixed in a batch, for example, “it can cause a headache for traceability systems that don’t cater to cascading traceability.” Failure to provide complete or accurate reports required by third-party certifiers results in high grower turnover and inconsistent supply. “Co-operatives seem very concerned that the growers are not maintaining correct traceability records, or are fudging them to satisfy record keeping. This can result in rejected product or loss of customer confidence,” says Whitehead. Software that reduces manual inputs can resolve these concerns. “A good traceability system should justify to growers the exact grades and weights that were achieved, moisture levels, pre-process and post-process quality results, which must all tie back to the original delivery that should also be clearly documented,” said Whitehead.

Trace and Track

Daan DeVries

Selecting the right system

DeVries advises suppliers to fully understand what they are trying to achieve by adding traceability. “Don’t just fall for the buzz or word or trend,” stressed DeVries. “Take time to determine whether traceability systems fit what you are trying to achieve,” he said.

UTZ requires accessible, transparent documentation in its certification process. The certifier’s software tracks coffee from origin and flow of commodities to reassure buyers that the coffee meets UTZ standards. Next generation software will further enrich the data and make it possible for buyers to trace coffee back to the individual farmers using GPS to pinpoint field locations.

“In a perfect world, one software solution would magically suit every potential user. Unfortunately, it isn’t so – generally speaking, any medium-to-large processor or co-operative will have special business process requirements not included with off-the-shelf software,” said Whitehead.

He suggests working with a vendor that has experience within the coffee sector, and can both react and adapt their system to address the specialized requirements of your business.

Traceability requirements are constantly changing and so is the technology. “Choose a software vendor that will help your business meet its challenges not only today, but for many years to come,” he advised.

The integration of technology empowers buyers with increased visibility and insight, simply by sharing the information they routinely gather on the fields where their coffee is grown.

Advocates for Price Transparency

Advocates for Price Transperancy

Transparent Trade Coffee (TTC) is an advocate for price transparency. TTC is one of four projects at Emory University’s Goizueta Business School that focus on appropriate compensation for specialty coffee growers.

“Our goal is to treat the people that grow coffee, in the same way that we treat successful entrepreneurs,” said Peter Roberts, TTC academic director. “Today, we spend a lot of time talking about yields, costs, living income, but very few companies share the price that they paid for their coffee, and in turn, what they sold it for.”

Markets today aren’t structured to allow farmers to gauge how much they should receive for their coffee, he said. TTC maintains that commodity indices do not represent true coffee valuations in the specialty segment because they do not account for the qualities and quantities and origin conditions of coffees that are purchased.

“This is rooted in the structural separation in where coffee is grown and where it meets the end market,” said Roberts.

Ideally, TTC would like to see specialty coffee divorced from the ICO’s commodity price index. To do this, TTC is working closely with 30 roasters that are voluntarily sharing the price they paid for green beans. These prices are published online in charts that list averages per lot, cupping scores, and retail price when available.

“Every negotiation benefits from benchmarks, this is a long-term education process,” said Roberts.